My tax returns are usually simple. My wife and I are retired and have only Social Security and 401K income. We own our home so have no mortgage and consequently we take the standard deduction. We haven't bought or sold stocks in years and we have no other investments.
Last year we sold a piece of land in Canada and that has complicated things! I know I can take a Foreign Tax Credit on the capital gains tax we paid to Canada on closing so I've been filling in the Form F1116 using Turbotax Premier. The only documentation I have is the statement I received from my Canadian attorney. Stepping through TT's instructions I have entered the Income type from the capital gain as Passive income. What I don't understand is the page where I can enter "Definitely Related Expenses". If I enter things like the Canadian realtor's and attorney's fees here my Federal Tax Due increases. I would have expected those expenses to have been deducted from my Gross Income from Canada and therefore decreased my US Federal Tax due. What am I missing here?
Thanks for any insights.
